Where is my prepaid tuition held before my course starts in Australia (2026)?

Plain-language guide · general information, not immigration advice

Your prepaid tuition is not sitting in the school's general operating funds. Under sections 28 and 29 of the Education Services for Overseas Students Act 2000 (ESOS Act), as published on the Australian Federal Register of Legislation and captured on 2 September 2026, a registered provider that receives tuition fees from an overseas student or intending overseas student before the course begins must maintain those fees in a dedicated account held with an Australian ADI — an authorised deposit-taking institution, as defined in section 9 of the Corporations Act 2001. The account is maintained by the provider, but the money standing to its credit is ring-fenced: while a student has paid and has not yet started, that portion of the balance is legally reserved and cannot be used for the provider's own purposes or seized by its creditors.

This article describes how the statute is written; it is general information only and not legal advice for any individual enrolment, refund or insolvency, so the current official text and a professional opinion on your own facts should govern any decision you make.

Whose account is my prepaid tuition actually in?

The account belongs to the registered provider, not to you, but it is not a normal trading account. Section 28 requires the provider to maintain it, and section 29(1) requires the provider to pay prepaid tuition fees "to the credit of" that account. In practice the money is held in the provider's name at an Australian bank or other ADI, with a statutory trust-like restriction attached to it.

Two details matter here. First, the provider must be on the Commonwealth Register of Institutions and Courses for Overseas Students (CRICOS) for this obligation to bite — the duty in section 28 falls on a "registered provider". Second, the duty survives deregistration: Note 2 to section 28 states that the obligation can continue to apply to a person or entity that ceases to be a registered provider, until matters relating to tuition fees paid into the account under section 29 have been dealt with or resolved (see section 7AB).

How quickly does the money have to reach that account?

Within five business days. Section 29(2) requires the provider to pay the fees into the account within five business days of receiving them, with "business day" taking its meaning from section 2B of the Acts Interpretation Act 1901. The countdown therefore runs from the provider's receipt of your payment, not from the date your offer was accepted or your visa was granted.

What exactly is the "protected amount"?

The protected amount is a floor, not a fixed sum. Under section 29(3), the provider must ensure that at all times there is a sufficient amount standing to the credit of the account to repay all tuition fees to every overseas student or intending overseas student (a "relevant student") in respect of whom fees have been paid to the provider and who has not yet begun the course the provider is to provide.

Because it is defined by reference to who has paid and who has started, the protected amount moves constantly: it rises as new students prepay, and it falls as students begin their courses.

Can the school spend my prepaid tuition before I start?

Yes — but only down to the floor. Note 2 to section 29 makes this explicit: there are no limits on withdrawals from the account as long as the balance remains above the protected amount. A provider that holds far more in the account than it currently owes to not-yet-started students can draw on the excess freely.

Below the floor, section 29(4) allows a withdrawal that reduces the balance below the protected amount for only three purposes, and section 29(5) caps such a withdrawal at no more than the tuition fees the provider received for that student before the student begins the course.

Permitted withdrawal below the protected amount	Source in the ESOS Act
Paying a refund to, or in relation to, a relevant student under section 46D, 47D or 47E	s 29(4)(a)
Paying an alternative provider, where the provider has arranged under section 46D for the student to be offered a place in an alternative course at the provider's expense	s 29(4)(b)
Paying the TPS Director under section 50C in relation to the relevant student	s 29(4)(c)

Suppose a student has prepaid and has not yet begun the course. The provider cannot legally draw on that student's prepaid fees to cover payroll, marketing or rent while those fees form part of the protected amount; it can only reach them through a refund, a funded transfer to another course, or a payment to the TPS Director.

When does my money stop being protected?

At the moment you begin the course. Note 1 to section 29(3) states that tuition fees of a relevant student cease to be part of the protected amount — and may therefore be withdrawn from the account — once the student begins the course the provider is to provide. The trigger is the statutory start of the course, not the date you paid, registered, or received your visa.

This is the single most important thing to understand about the timing: the protection is designed to cover the window between payment and commencement. Once teaching starts, those particular fees become available to the provider like any other revenue.

Can creditors take the money if the provider has debts?

No, not while it is protected. Section 29(6) removes any doubt: the protected amount is not available for the payment of a debt of any creditor of the provider (other than the three withdrawals listed above), and it is not liable to be attached or taken in execution under the order or process of a court at the instance of any creditor of the provider (again, other than those three withdrawals).

So the ring-fence operates against both voluntary and forced transfers: the provider cannot choose to pay a creditor out of the protected amount, and a creditor cannot get a court to reach it.

Are all providers required to do this?

No. Section 31 exempts three kinds of provider from sections 28 and 29 and from regulations made under section 30:

a provider administered by a State education authority;
a provider entitled to receive funds under a Commonwealth law for recurrent expenditure for the provision of education or training, unless the regulations exclude it;
any other provider specified in the regulations.

The section also closes a loophole: a private corporate body established in connection with an exempt provider is not itself exempt merely because of that connection.

What happens if a provider breaks these rules?

It is a criminal offence. Under section 32, a registered provider — or, where the provider is an unincorporated body, its principal executive officer — commits an offence by engaging in conduct that contravenes a requirement of section 28 or 29, provided the provider is not covered by section 31. The penalty is 60 penalty units, and subsection (3) makes it an offence of strict liability (see section 6.1 of the Criminal Code). Contravening regulations made under section 30 is carved out of this offence by subsection (2).

Frequently Asked Questions

Is my prepaid tuition held in my name or the provider's name?

The account is maintained by the registered provider, with an Australian ADI, under section 28 of the ESOS Act. Your name does not appear on the account, but the law attaches a protected amount to it for students who have paid and not yet begun their course.

How long can a provider hold my payment before banking it into the protected account?

Five business days. Section 29(2) requires the provider to pay the fees into the account within five business days of receiving them, using the business-day definition in section 2B of the Acts Interpretation Act 1901.

Can the school use my prepaid fees to cover its running costs?

Only the part above the protected amount. Note 2 to section 29 says withdrawals are unlimited while the balance stays above that floor; below it, section 29(4) permits withdrawals only for a refund under section 46D, 47D or 47E, a payment to an alternative provider after the provider arranges an alternative course under section 46D at its own expense, or a payment to the TPS Director under section 50C.

When do my fees leave the protected amount?

Once you begin the course. Note 1 to section 29(3) states that a student's tuition fees cease to be part of the protected amount, and may therefore be withdrawn, when the student begins the course the provider is to provide.

If the provider becomes insolvent, can its creditors claim my prepaid tuition?

Not the protected portion. Section 29(6) provides that the protected amount is not available to pay any creditor's debt and cannot be attached or taken in execution under a court order or process at a creditor's instance, except for the three withdrawals allowed by section 29(4).

Do government or public providers have to hold prepaid fees this way?

Not necessarily. Section 31 exempts providers administered by a State education authority, providers entitled to Commonwealth recurrent funding for education or training (unless excluded by the regulations), and providers specified in the regulations. A private corporate body linked to such a provider is not exempt just because of that link.

What penalty applies if a provider ignores the account rules?

Section 32 sets a penalty of 60 penalty units for conduct that contravenes section 28 or 29, and classifies it as a strict liability offence. The offence does not apply to providers covered by section 31, nor to a contravention of regulations made under section 30.